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Dear Mike, i have got another question which frustrated me, past paper 2014 June question 4, i just mention about item B, my question is whether depreciation needs to be calculated at the year of disposal or at the month of disposal, i remember that the depreciation should not be calculated and posted to profit or loss account when the Non-current asset is in the middle of disposal, but i forget whether within the month of disposal or within the year of disposal, i think definitely one of them is right, however this question’s answer which acca gave me is that all year’s depreciation had been calculated and posted it’s all to the profit or loss account within the year of disposal, would you please explain to me ?
many thanksThere’s no strict rule – it’s whatever the question directs. It may say “…….. a full year’s charge in the year of purchase and none in the year of sale” in which case you follow that instruction
Or it may say “depreciation is calculated at (say) an annual rate of 10% for as many months that the asset is owned in the year” in which case you calculate a full year’s charge and then time apportion
Just be prepared for either (or both)
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